Condominium Law Continues to Evolve
The legal landscape for condominium law continues to evolve. On August 5, 2024, Miami-Dade Circuit Court Judge Thomas J. Rebull issued an illuminating order in the long-running Carillon litigation. Moreover, on October 1, 2024, a key deadline in HB 1021 (passed earlier this year) will kick in. Let us discuss both of these events in turn.
Latest Carillon ruling
A quick refresher to begin: the Carillon case is a long-running dispute between multiple condominium (sub-) associations and the hotel operator at the Carillon in Miami Beach. The parties have long disputed which parts of a building must be (1) “common elements” owned collectively by all residential unit owners in a condominium, as opposed to (2) “shared components/facilities” owned solely by the hotel operator though used by the unit owners.
The distinction is important because if the disputed portions of the building are “common elements,” then the residential unit owners would have control over the repair and maintenance of the common elements, and the power to vote on any costs and expenses incurred in connection with any such repair and maintenance. By contrast, if the disputed portions of the building are “shared components,” then the owner of the hotel has the power to make all decisions regarding the repair and maintenance of the shared components and the right to pass much of the cost of any such repairs to the residential condominium association.
Back on November 17, 2023, the Carillon court (with Judge Jennifer D. Bailey presiding at the time) issued a final judgment. Part of that ruling required the parties to determine what is “legally condominium property to the respective associations.”
On August 5, 2024, Judge Rebull (as the successor to Judge Bailey) revisited this question at the insistence of the hotel operator. The hotel operator asked Judge Rebull to stay the final judgment’s requirement that the parties sort out the common elements themselves, allowing time for the appellate court to weigh in. In support of its motion, the hotel operator argued that its position on the “common elements” question — i.e., that there were very few common elements at the Carillon — was the correct view.
In deciding the motion to stay, Judge Rebull recognized that Judge Bailey had not provided the parties with explicit guidance in determining exactly which parts of the building had to be “common elements.” In fact, Judge Rebull acknowledged that Judge Bailey had expressly left that task to the appellate court (i.e., the Third District Court of Appeal).
Consistent with Judge Bailey, Judge Rebull did not definitively weigh in on the question of what parts of the Carillon must be common elements, leaving that to the appellate court. However, Judge Rebull did grant the stay, and in doing so, indicated that the hotel operator’s position on the “common elements” question was likely to prevail at some point in the future.
Explaining its decision, the court concluded that “for anything to be a ‘common element’, it must first be “condominium property.” Judge Rebull cited several grounds for this ruling, including the newly-enacted Section 718.407, Fla. Stat., which “further establishes that common elements are ‘only those portions of the building submitted to the condominium form of ownership’.” (More on that below.)
Notably, Judge Rebull also concluded that this prerequisite for property to be a common element was fully consistent with prior case law, including the famous IconBrickell case.1 In IconBrickell, the condominium declaration stated that the hotel’s “shared facilities” (often known as “shared components”) were submitted to the condominium ownership. That is, the IconBrickell declaration was relatively broad in defining the types of property that were “condominium property” and, therefore, eligible to be common elements.
Conversely, in Carillon itself (and other cases cited by Judge Rebull), the condo declaration was relatively narrow in that it explicitly excluded the hotel’s “shared facilities” from condominium ownership. By distinguishing the IconBrickell and Carillon cases from each other on their facts, Judge Rebull was able to reconcile IconBrickell (at least in part) with other cases (and the new legislation) allowing minimal common elements in a condominium. Put another way, even though IconBrickell has been read to adopt an expansive view of “common elements,” Judge Rebull shrewdly noted that IconBrickell did not mandate such an expansive reading in all condominium cases.
Simply put, not all condo declarations are drafted the same, and their differences can matter—a lot. Whether a given piece of property (e.g., a hotel lobby) was “submitted to condominium ownership” in the declaration can be crucial in determining whether that property must be considered a common element owned by all residential unit owners, or instead can be a “shared” facility/component owned solely by the hotel operator.
Again, to be clear: Judge Rebull’s recent decision did not definitively decide what was—or was not—a common element at the Carillon. Such clarity in Carillon will have to wait for future rulings, including perhaps from the pending appeal to the Third District Court of Appeal. However, Judge Rebull’s opinion on the matter is an open indication of what he thinks the proper result should eventually be.2
The bottom line: the language in the declaration regarding whether property is “submitted to the condominium ownership” can make or break an argument as to whether part of a building is a “common element” owned by the residential unit owners, or instead a “shared component/facility” owned by the hotel operator.
New Statutory Amendments and Pending Litigation
Judge Rebull’s ruling explicitly factored in this year’s legislative amendments to the Florida Condominium Act, which were contained in HB 1021. Our colleagues here at Bilzin Sumberg have previously written about some of these amendments.3
As noted in those earlier articles, the amendments clarified that a condominium building can have very limited common elements, as long as certain disclosures are made to the unit owners. This “clarification” to the law, like some of the other amendments to Section 718, apply retroactively, which is why Judge Rebull took these new amendments into account in the old Carillon case.
However, there is an important catch in a footnote to the amended statute: these “amendments do not revive or reinstate any right or interest that has been fully and finally adjudicated as invalid before October 1, 2024.” In other words, if a court “fully and finally adjudicates” a condo dispute before October 1, 2024, then the new amendments will not unwind that final adjudication.
For example, if on September 30, 2024, a court definitively rules that residential unit owners are entitled to control over certain common elements, and that ruling interprets common elements to be broader than is required under the new statutory amendments, then the ruling apparently will stand the test of time—notwithstanding the amendments.
This could mean that residential unit owners across the state will be seeking full and final judgments in their favor ahead of the October 1, 2024 deadline. Otherwise, final judgments entered on or after October 1, 2024 apparently will not be very “final” at all. Instead, the amendments to Section 718 arguably will “revive or reinstate” rights and interests starting in October, which could mean reviving a hotel’s ownership rights and interests in property that residential unit owners might otherwise contend is a common element.
1 Our colleague, Martin Schwartz, wrote about this opinion when it was issued. https://www.bilzin.com/insights/publications/2020/12/mschwartz-iconbrickell.
2 When our colleague Kevin Koushel previously wrote about the Carillon case last year, he observed that the court at that time recognized that the common elements are what the “Legislature has decreed must be owned/controlled by unit owners as a whole.” It is that very question that still awaits a definitive answer in Carillon. The pending appeal might finally provide that clarity, especially in light of the Florida Legislature’s clarifying amendments in HB 1021. https://www.bilzin.com/insights/publications/2023/02/hotel-condos-an-endagered-species
3 https://www.bilzin.com/insights/publications/2024/06/vertical-subdivisions-included-in-condominium-act; https://www.bilzin.com/insights/publications/2024/06/rounding-up-hb-1021s-impact-on-florida-condos; https://www.bilzin.com/insights/publications/2024/06/additional-condominium-building-safety-measure.
